iPod 4 Generation GPS/Location Service - Question

Hello, I have a iPod touch 4G. I'm running iOS 6.1.3. And, I have enabled my Location Services. But, I also downloaded few Navigations apps, and some of them are: Navigon, Sygic, And NavFree. And They kinda work. I heard that the iPod touch 4Gen DOESN'T have a GPS Satellite bult in it. Look, I am in Australia. And, I first, was in Sydney (in the city on sheperd st). And i had no internet acces on my Ipod touch 4G. And I launched my app Navigon, and it showed where I am. It was showing my correct location. And then i moved around in my car, and the mark of my car in the app KEPT moving along with me. But it doesnt moove as smooth. Like, it lags for 1-2 secs. Like, it mooves, and stops for a sec, and then moves. But my question is, that HOW CAN MY IPOD TOUCH 4G FIND AND KNOW WHERE I AM without internet acces ? Its pretty cool it can, but DOES IT HAVE A GPS INSIDE ? and i tried other apps like sygic or Navfree, they move and find me where I am with my WI-FI turned off. So, how can it work like a gps without any gps chip inside. Tell me!

-Thank you.